We had mentioned that the decision to implement a blanket ban on trading by South Korea was one of the primary reasons that triggered a sell off. In this regard, yesterday, South Korean Financial Supervisory Service (FSS) authorities announced that they are investing a case of insider trading by some of their employees. Choi Heung-sik, the head of FSS has confirmed that some of their officials have sold their crypto holdings before the announcement of a blanket ban was made. FSS has guaranteed to make all findings, related to insider trading, publicly available.
The preliminary details provided by the investigating agency indicate that before the proposed blanket ban was announced, the crypto asset holdings were sold by an FSS employee hired by the Policy Coordination Office. The employee was assisting the organization in the establishment of measures to curb speculation in crypto currencies.
It is believed that the official had reportedly purchased crypto currencies worth 13 million Won ($12,220) on July 3, 2017. However, after becoming aware of the proposed ban on crypto currency trading, on December 11, 2017, the official diluted his holdings for 20 million Won. That left him with a profit of 7 million Won.
Hong Nam-ki, the Director of the Office of Coordination, said (Korean translated to English)
“The relationship between the inside and the outside of the company [is being] investigated by one or two civil servants as I know, and I would like to ask government officials to refrain from investing…There is a bar. ”
A senior official of FSS had pointed out that according to the Korean Public Service Ethics Act, to prevent the misuse of internal information, public officials are not allowed to trade in stocks. However, crypto currencies are not recognized as a currency or financial asset and there is no relevant code that governs them as of now. Still, the official may get punished for the misuse of internal information.
Despite the proposed ban, South Korea has already taken several measures to streamline crypto currency trading. Investors are no longer allowed to use trading accounts with virtual names. Investors who refused to use real-names in their accounts were fined.
In this regard, the Bank of Korea Governor Lee Ju-yeol said
“it’s understandable that the government is pushing ahead with its plans to further regulate the crypto currency market, as the prices of crypto currencies are showing sudden ups and downs. The trend is not good from the perspective of investors”.
Investors and speculators who are against the crypto currency ban has launched a petition with the government. The petition has been signed by 210,000 people as of date. According to the Wall Street Journal, the petition reads “Please don’t take away our happiness and dreams that we could have for the first time living in South Korea.”
Prime Minister Lee Nak-yon has sought to calm down the situation by saying that a new legislation has to be passed in order to ban crypto currency trading. That means, the national assembly has to convene and discuss the matter before a final decision is taken.